Who’s Minding the Store - The Current State of
Food Safety and How It Can Be Improved
THE PROMISE OF SAFE FOOD:
A Law-in-Action Perspective.
Denis W. Stearns, J.D.
dstearns@marlerclark.com
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FOOD: the most dangerous
product in the United States?
“In fact, contaminated food products caused
more deaths each year than the combined
totals of all 15,000 products regulated by the
U.S. Consumer Product Safety Commission.”1
For just FIVE foodborne pathogens, medical
costs, productivity losses, and the costs of
premature death total: $6.9 BILLION2
1.
Buzby, et al. Product Liability and Microbial Foodborne Illness (2001) ERS
Agricultural Economic Report No. 799.
2.
USDA ERS 2000 Cost-estimate, cited in S. Crutchfield & T. Roberts,
“Food Safety Efforts Accelerate in the 1990’s,” Food Review, 23:3, p. 48
(September-December 2000).
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Primary Incentives for Food Safety
ECONOMIC
+ Cost/Benefit Analysis
+ Return on Investment
+ Brand-value, good will
LEGAL
— Regulations
— Lawsuits
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THE NEED FOR REGULATION:
Market Failure & Public Safety
Food is a “Credence” Good
Because safety is invisible, no price premium
Companies unable to compete on safety
“For the most part, food safety is a
credence attribute, meaning the
consumers cannot evaluate the existence
or quality of the attribute before purchase,
or even after they have consumed [it].”1
1. See E. Golan, et al., Savvy Buyers Spur Food
Safety Innovation in Meat Processing, Amber
Waves, April 2004,
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HISTORY OF FOOD REGULATION:
Safe Food as a Moral Obligation
Law of Moses required: “a perfect and just weight, a
perfect and just measure.” DEUTERONOMY 25:15
Han Dynasty, 2nd Century BC prohibited: “the making
of spurious products, and the defrauding of buyers.”
Roman Law, Theodosian Code, A.D. 438 required
bread to for public sale to be arranged on the steps of
a building according to its grade to prevent fraud.
Food exchange was neither anonymous nor disinterested; it
was defined by relationship, not contract nor other legal duty.
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Merchants and the Rise of Markets
The Middle Ages saw the rise of farmer-sellers and
merchant-manufacturers selling at local markets.
“Expanded trade in the countryside was…itself a
precondition for the growth of the cities.”1
Given the local character of the economy, a merchant’s
reputation would be well-known and much relied upon.
Food quality and integrity protected by extra-legal sanctions,
the importance of preserving reputation, and “self-help.”
1
See H.J. Berman, LAW AND REVOLUTION 296 (Harvard 1983)
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Examples of Extra-Legal Sanctions
In 1315, in France, angry French citizens staged mass
punishment of 16 bakers who mixed flour with animal
droppings, lashing them to wheels and beating them.
Butcher paraded through the streets in a garbage cart
for the offence of selling “measly” meat.1
Community accountability thus
joins moral accountability.
See H.J. Berman, LAW AND REVOLUTION 296 (Harvard 1983)
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Merchant Guilds & Purity Laws
Merchants formed self-policing guilds, giving rising to a
body of customary mercantile law to resolve disputes.
violators risked expulsion from the guild
meant to protect reputation of merchant class
As guilds became more powerful, self-policing lessened,
giving rise to local ordinances prohibiting adulteration
Purity laws enacted—e.g., Thuringian Rostbratwurst purity
law of 1432, and the Bavarian beer purity law of 1516
The lack of anonymity in the food supply meant community
reputation continued to be primary incentive for safe food.
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The Enforcement of Civil Remedies:
The Origins of Product Liability
Ø A product need
only be as good as
was promised
Ø Broken promise
both creates and
defines liability
“the only safe rule is to confine the right
to recover to those who enter into the
contract: if we go one step beyond that,
there is no reason why we should not go
fifty. The only real argument in favor of
[allowing] the action is, that this is a
case of hardship; but that might have
been obviated, if [Mr. Wright] had
made himself party to the contract. “
Winterbottom v. Wright, circa 1842,
England (affirming rule of privity).
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GROWTH OF INDUSTRIALIZATION:
From the 18th to the 20th Century
AGRARIAN
INDUSTRIAL
RURAL
URBAN
FOOD
GROWN
TO EAT
FOOD
BOUGHT;
GROWN
TO SELL
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The Rise of National, VerticallyIntegrated Food Companies
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The Invention of Refrigerated Rail
Car & Nationwide Distribution
And so a food supply once defined by a lack of anonymity
and community accountability transformed into its opposite.
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ECONOMICS BECOME KING:
A Call for National Regulation
Factory food production de-emphasized
quality, emphasized cost & productivity.
Investing in quality and safety was an
economic and competitive disadvantage.
“there is an incentive for sellers to
market poor quality merchandise
since the returns for good quality accrue
mainly to the entire group…rather than to the
individual seller.” ~ George Akerlof, Ph.D.
from “The Market for Lemons: Quality
Uncertainty and the Market Mechanism.”
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Definition of
“Adulteration”
So who was the
Pure Food Act &
Federal Meat
Inspection Act
really intended to
protect?
by Prosper Montagne, published 1938
14
Collective Punishment: Fresh Spinach
“With the fall 2006 outbreak, all spinach growers suffered from
decreased consumer demand for their product, even though
only one grower’s spinach was contaminated.”
See L. Calvin, Outbreak Linked to Spinach Forces Reassessment of Food Safety
Practices, Amber Waves, June 2007,
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THE TRIUMPH OF BIG FOOD:
Leveling the Competitive Playing Field
“Buried in the disputes
over federal regulation is a
conflict between local and
national food companies.
In various ways, federal
regulations conferred
competitive advantage on
national firms.”
See C. Coppin and J. High, THE
POLITICS OF PURITY: Harvey
Washington Wiley and the Origins of
Federal Food Policy (1999).
“”The unwholesome, adulterated,
mislabeled, or deceptively packaged
articles can be sold at lower prices
and compete unfairly with the
wholesome, not adulterated, and
properly labeled and packaged
articles, to the detriment of consumers
and the public generally.” FMIA, §602
Congressional Statement of Findings,
Compare Medieval Merchant
Guilds’ “self-policing” with
Western Grower’s Association
Produce Marketing Agreement.”
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BENDING THE RULE OF PRIVITY:
An Exception for Unsafe Food.
“To the old rule [of privity]
should be added another
exception—not one arbitrarily
worked by the court—but
arising...from the changing
conditions of society. … a
manufacturer of food products
under modern conditions
impliedly warrants his goods
when… and that such warranty is
available to all who may be
damaged by reason of their use
in the legitimate channels of
trade…” Mazetti v. Armour & Co.,
75 Wash. 622 (1913)
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Creating Modern Product Liability:
The Justice Traynor Two-Step
STEP ONE: “The consumer no longer
has the means or skill enough to
investigate for himself the soundness
of a product.” Escola v. Coca Cola
Bottling Co., 150 P.2d 436, 467
(1944) (Traynor, concurring).
STEP TWO: “The purpose of [strict]
liability is to insure that the costs of
injuries resulting from defective
products are borne by manufacturers
that put such products on the market
rather than by the injured persons who
are powerless to protect themselves.”
Greenman v. Yuba Power Products,
377 P.2d 897 (1963)
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Who Pays for the decision NOT
to invest in food safety?
June Dunning
Betty Howard
Ruby Howard
“Private markets often fail to
provide adequate food safety
because information costs are high,
detection often very difficult, and the
nature of contamination is complex.
Underlying many of the food safety
failures is the existence of
externalities, or costs not borne by
those whose actions create them.”
Helen H. Jensen, Food-system risk
analysis and HACCP, p. 63, in NEW
APPROACHES TO FOOD-SAFETY
ECONOMICS, G.J. Velthius, et al. (eds.)
(2003).
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Externalities: “…costs not borne by
those whose actions create them.”
“Reported outbreaks probably account for only a small
proportion of deaths from unknown foodborne agents because
most foodborne outbreaks are never recognized or reported.”1
SOCIETY
1. Paul Frenzen, Deaths Due to Unknown Agents,
Emerging Infect. Dis., 10; 9 (Sept. 2004).
Food Industry
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THE NEED FOR LITIGATION:
Market Failure & Public Safety
“Lawsuits by consumers to recover damages due to foodborne
illness can affect the behavior of firms that make or distribute food
products. The magnitude of this effect is unknown, however,
because information about litigation involving injuries due to food
products contaminated by microbial pathogens is scarce.
Firms…generally prefer to resolve consumer complaints about
foodborne illness outside the courtroom, where they can keep the
compensation payments confidential, and avoid or reduce adverse
publicity about their products.” (Buzby, et al., Chapter 1, at p. 2)
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Economically-speaking, a product liability
lawsuit is a COST-SHIFTING mechanism.
Person injured by unsafe food pays cost
in medical bills, lost wages, and pain.
Lawsuit seeks recovery of damages
caused by (profits of) sale of unsafe food.
While lawsuits remain a relatively ineffective incentive to
increased food safety investment, they are highly effective
at compensating the person injured by defective foods.
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LEARNING TO TRUST AGAIN: A
Return to Locally-Sourced Foods
“Locavore”— a
person who adopts the
practice of relying on
fresh, locally grown
food items
2007 Oxford American
Dictionary Word of the
Year
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Tel: 206.346.1888
Fax: 206.346.1898
email: dstearns@marlerclark.com
web: www.marlerclark.com
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